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Land Law > Co-ownership > Flashcards

Co-ownership Flashcards

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1
Q

If A and B both hold legal title (as joint tenancy obvs) and beneficial title as tenants in common, what happens when B dies and leaves their equitable interest to C?

Leaving this here cos I get confused re this

A

A becomes sole legal owner (and so can deal with property) and A and C are tenants in common. A can sell the property but needs to overreach C’s equitable interest so buyer can take property free from it

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2
Q

When will concurrent co-ownership arise?

A

Where 2 or more people own the same estate (freehold or leasehold) together in the same piece of land at the same time

E.g. couple buys house together, both own freehold concurrently

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3
Q

What happens today whenever land is owned jointly?

A

A trust of land is imposed

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4
Q

What is the effect of a trust of land being imposed?

A

Legal title (held by Ts) is separated from the equitable title (held by Bs)

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5
Q

What is the difference between legal and equitable title?

A
  • Legal title - held by Ts, are the registered owner(s) at Land Registry, and have powers and duties of management
  • Equitable title - held by Bs, names kept private and arrangements re equitable title stay off register

A PERSON CAN BE BOTH TRUSTEE AND BENEFICIARY

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6
Q

What must the legal and equitable title be held as?

A
  • Legal title must be held as joint tenancy
  • Equitable title can be held as joint tenancy or tenancy in common
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7
Q

When someone is the beneficiary of a trust of land, what are they regarded as in equity and what do they have?

A

The equitable owner - they have a proprietary right (equitable interest) in land subject to a trust

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8
Q

What are the formalities for creating an express trust of land?

A

Trust must be evidenced in writing and signed by the declarant(s)

E.g. piece of land transferred to A to hold on trust for B; A is trustee (legal owner) and B is beneficiary (equitable interest/owner)

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9
Q

Examples of express trust

A
  1. Grandparent makes a will and leaves house on trust for 6 grandchildren and appoints A and B as Ts - executors of estate transfer legal title of house to A and B and grandchildren hold equitable interest. Ts can sell the house but must account to Bs for or reinvest proceeds
  2. Brother and sister by home together, brothers pays 75% of price and sister pays 25%. Transfer deed transfers legal title to them both - express declaration they hold property for themselves beneficially in proportion to their contributions. Brother and sister hold both the legal and equitable title; can reflect their individual contributions in equity
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10
Q

What are the 2 types of implied trust that will be created if certain circumstances exist?

No formalities to creation of such trusts

A
  1. Resulting trust
  2. Constructive trust
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11
Q

When will a resulting trust be implied?

A

Property bought in A’s name but B makes financial contribution; if B paid 25% of price, A will hold property on trust for A and B in a 75%:25% ratio

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12
Q

How do resulting trusts work in the context of family home?

A

They no longer have any place; a common intention constructive trust will be used instead

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13
Q

When will a constructive trust be implied?

A

In cases where it is unconscionable for the legal owner of the land to deny interest of another person

Wider range of circumstances

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14
Q

Example of implied trust

A
  • V and W buy home together, both contribute but property transferred to V as legal owner
  • Property bought as a family home and W paid part of price, so may be able to establish an interest under a common intention constructive trust (no formalities required)
  • V will hold property as T for V and W in shares quantified by the court
  • If property mortgaged or sold; V as T has power to execute relevant deed
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15
Q

What are the two types of co-ownership?

A
  1. Joint tenancy
  2. Tenants in common
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16
Q

What is meant by unity of possession?

A

No co-owner is entitled to exclusive possession of any part

Characteristic shared by joint tenancy and tenants in common

WITHOUT UNITY OF POSSESSION THERE IS NO CO-OWNERSHIP

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17
Q

What are the characteristics of a joint tenancy?

A
  • All co-owners constitute one single entity
  • Own property as one collective entity (no shares)
  • Right of survivorship applies
  • Co-owners must hold the four unities of title
  • Level of contribution irrelevant
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18
Q

What are the characteristics of a tenancy in common?

A
  • All co-owners not a single entity, but each have a distinct but undivided share in the land e.g. each has a quantified share of the whole, but cannot point to a particular part and claim that share
  • Right of survivorship does not apply (interest can be inherited by a third party)
  • Share can be proportionate to contribution
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19
Q

What are the four unities of title?

A
  1. Possession - each co-owner is as entitled to any part of land as others
  2. Title - all co-owners acquire title from same document (e.g. same deed or lease)
  3. Interest - interest in land held by each co-owner must be of same nature and duration (e.g. for leasehold = hold lease for same length of time with joint obligations, for freehold = hold same freehold interest like legal fee simple or equitable freehold)
  4. Time - interest must vest at same time (does not mean they must sign document/move into property at the same time)

Necessary for joint tenancy

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20
Q

What is the right of survivorship?

A

The notional interest of the deceased joint tenant automatically accrues to the surviving joint tenants

Incorrect to say ‘share’ goes to survivors, as never had a share

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21
Q

What if a will purports to leave a joint tenant’s interest to someone?

A

Will have no effect; a will does not take effect until after death, by which time surivorship has already operated

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22
Q

How does survivorship apply to tenants in common?

A

It does not - it will pass in accordance with deceased’s will/under intestacy rules

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23
Q

What are the rules applying to legal title in co-ownership?

A
  • Maximum of 4 legal owners
  • Ts must be sui juris (of age and sound mind)
  • Legal title must hold the property as joint tenants

These people will deal with buyers and lenders

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24
Q

What happens if the land is transferred to more than 4 people?

A

The first four named who are sui juris will be the legal title holders

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25
Q

What are the implications of the requirement that the legal title be held as a joint tenancy?

A
  • Legal title holders must have the four unities
  • These holders are seen as a single entity and collectively hold the whole legal estate - so on death of any joint tenant, right of survivorship operates
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26
Q

Can a legal joint tenancy be severed to make a tenancy in common?

A

No

Avoids complications of legal owners leaving separate shares to heirs

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27
Q

What is the curtain principle of Land Registration?

A

Equitable title is the private face of co-ownership - names of equitable owners do not appear on registers of title and the way the interests are held is not disclosed

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28
Q

What are the rules applying to equitable title in co-ownership?

A
  • No limit on number of people who can hold equitable interest in piece of land
  • No requirement to be sui juris (e.g. can be held on trust for under-18s)
  • Equitable owners can choose whether they hold equitable title as joint tenants or tenants in common
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29
Q

When can equitable title be held as a joint tenancy and when will it be a tenancy in common?

A

When the four unities are present - if any missing there will be a tenancy in common providing unity of possession exists

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30
Q

How can parties show they hold the beneficial interest as joint tenants?

A

Making an express declaration in the will or transfer deed

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31
Q

Is an express declaration enough to show that parties hold the beneficial interest as joint tenants?

A

No - four unities must also be present

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32
Q

What happens under severance?

A

An equitable joint tenancy can be severed by any joint tenant so that that person in future holds a separate share as a tenant in common

Severance = process of converting equitable interest held as a joint tenancy into an interest held as a tenancy in common

33
Q

Can a severance be reversed?

A

No

34
Q

What will prevail even if the four unities are present?

A

An express declaration that the owners hold as tenants in common

35
Q

Can something fall short of an express declaration that says owners hold as tenants in common?

A

Yes, insofar as it contains words like ‘in equal shares’ or ‘equally’ to indicate the parties have shares

I.e. no express declaration = still find with these words to confirm tenants in common

36
Q

What happens re equitable title where there is no express declaration or specific wording to denote whether joint tenancy or tenancy in common?

A

Equitable title will be held as joint tenancy (provided 4 unities are present)

37
Q

When is there a rebuttable presumption that a tenancy in common will arise?

A
  • Land is a business asset
  • The purchase of a non-domestic property has been paid in unequal shares
38
Q

Summary on legal and equitable titles

A
39
Q

What is severance?

A

The process of converting an equitable interest held as a joint tenancy into an interest held as a tenancy in common

40
Q

Why would an equitable joint tenant wish to sever that joint tenancy to create a tenancy in common?

A

Usually to exclude operation of survivorship, so a distinct share in property can be left to someone other than surviving joint tenant(s) on death

41
Q

Does severance bring co-ownership to an end?

A

No - simply changes basis on which equitable co-owners continue to hold equitable title

42
Q

Can legal title be severed?

A

No - only possible to sever an equitable one

Rationale: preserve simplicity of legal title; if legal Ts could sever joint tenancy and leave interest held as a tenancyin common to other(s), that would complicate legal title for two reasons:
1. Number of legal owners could grow instead of shrink
2. Documents would be required to prove that new holders had actuall acquired title property

43
Q

When must the severance take place?

A

During the joint tenant’s lifetime

So a will does not sever a joint tenancy as this takes place after death

44
Q

How can severance of an equitable joint tenancy take place?

A
  1. Notice in writing; or
  2. Other acts or things
45
Q

What does ‘other acts or things’ mean?

A

Is deliberately vague, and encompasses the 3 ways severance could happen as stated in Williams v Hensmen:
1. Unilateral act by one joint tenant (total alienation, partial alienation, or involuntary alienation)
2. Mutual agreement
3. Mutual conduct

46
Q

When a joint tenant successfully severs the equitable joint tenancy, what is the effect? Will proportions be based on contribution?

A

They will hold a tenancy in common which is an equal share based on the number of former joint tenants not the proportion of contributions made to initial purchase price

47
Q

Will severance affect all the equitable joint tenants?

A

Unless there is only 2 (in which severance affects both) - the remaining equitable joint tenants continue to hold equitable title as joint tenants

48
Q

What would happen if A B C and D held equitable title in tenants in common of 25% each, and A dies and passes their share to E?

A

E would join B C and D as tenant in common with each 25%

49
Q

Summary of how severance can happen

A
50
Q

What are the formalities or requirements for notice in writing as a mode of severance? When is a signature required?

1st mode of severance

A

No formalities, not even signature, but must:

  • Demonstrate unequivocal and irrevocable intention to sever the equitable joint tenancy immediately
  • Be served on all other equitable joint tenants by personal service or post

Severance does not require a signature but does require service on all other equitable joint tenants

51
Q

Must the intention be immediately or can it be in the future?

A

Must be immediate - a desire to order a sale in the future will not seve

Re Draper’s - divorce petition requested order for matrimonial to be sold and proceeds split immediately = severed
Harris - divroce petition requested for an order ‘as may be just’ re matrimonial home = not severed

52
Q

When will a notice be deemed to have been served? Must it be read?

A

When it has been delivered i.e. does not have to be read

53
Q

If it is posted, when will the notice deemed to be served?

A

If it has been left at the last known place of abode or business of joint tenants (even if they are not there)

  • If made by registered post and not returned undelivered = deemed served at time a registered item would be in the ordinary course of events

So could be served by the severing joint tenant leaving/posting it there

Kinch - wife wanted to sever, so notice sent by solicitors by ordinary post on 3rd Aug, husband suffered serious heart attack on 5th Aug and was in hospital when letter arrived. Wife changed mind and so destroyed letter when it was delivered. But notice in writing had been ‘given’/served on husband when it was delivered to home; destruction of letter had no effect

54
Q

Is there a distinction between ‘giving’ and ‘serving’ a notice?

A

No - so do not actually have to be given notice

Can simply be signed for and not returned undelivered

55
Q

What happens if
1. Notice is not served on equitable tenants in common?
2. Notice is served on only a few of the equitable joint tenants and not all of them?

A
  1. Still effective - only equitable joint tenants need to be served
  2. Notice is completely ineffective - must serve on all equitable joint tenants
56
Q

What does ‘other acts or things’ comprise?

2nd mode of severance

A
  1. Unilateral act by one joint tenant operating on its own share
  2. Mutual agreement of joint tenants
  3. Mutual conduct (any course/dealing indicating that interests were mutually treated as constituting a tenancy in common)
57
Q

Must the unilateral act be known/consented to by other joint tenants?

A

No - totally unilateral!

NB the ‘share’ is not created until the act takes place

58
Q

What are the 3 unilteral acts?

A
  1. Total alienation
  2. Partial alienation
  3. Involuntary alienation
59
Q

What is total alienation?

A

Where severing owner disposes of interest permanently by way of sale or gift of interest

60
Q

What is partial alienation?

A

Severing owner disposes of interest temporarily by way of mortgage or lease

Is partial because holder takes back interest when loan repaid/lease expires

61
Q

What is involuntary alienation?

A

Where joint tenant declared bankrupt by court

Involuntary as happens against will of tenant

62
Q

What happens if a joint tenant sells their equitable interest to another joint tenant?

Form of total alienation

E.g. A B C and D own property as beneficial joint tenants and B sells to C…

A

The purchaser will remain a joint tenant but also hold the share of the seller as a tenant in common

E.g. A C and D continue as joint tenants but C also holds a 25% share as a tenant in common. B remains a legal joint tenant as this cannot be severed!

63
Q

Where all legal joint tenants act together to create a legal mortgage/charge over property, will this result in severance?

A

No, because joint tenants are charging the legal estate, and equitable estate remains unaffected

Cf where one joint tenant mortgages their equitable interest, this will be an act of severance through partial alienation and they will have a tenancy in common

64
Q

What happens where one joint tenant tries to fraudulently mortgage/sell the entire property?

A

Disposition is deemed to be a mortgage/sale of that individual’s own equitable interest (so operates as a severance)

65
Q

When will severance by mutual agreement occur?

A

When all equitable joint tenants agree that one person’s interest is severed - creating tenancy in common

66
Q

Does the mutual agreement need to go as far as being an enforceable contract to sell the interest?

A

No - must amount to express/inferred agreement that one perosn’s interest is separate/severed

I.e. order need not be finalised; agreed terms is enough

E.g. Burgess - R agreed to sell share to H for £750, but subsequently changed her mind, but H died before reslved. H’s daughter took share upon death. Court held that severance occurred by mutual oral agreement when parties mutually agreed price, and it did not have to amount to a specifically enforceable contract for sale of interest; merely that parties agreed to sever the joint tenancy

67
Q

When will severance by mutual conduct arise?

A

Most likely where parties have not reached a point where it could be said there is a mutual agreement to sever - but prolonged period of negotiation suggests that they do recognise and are treating one person’s interest as being separate

68
Q

Will negotiations demonstrate mutual conduct and commence severance?

A

Not necessarily - negotiations do not infer mutuality (not possible to infer from ongoing negotiations any mutual working towards a final end in view)
But manner in which negotiations are conducted can e.g. started off on understanding that house would be split in some way

69
Q

Will the making of mirror wills amount to mutual conduct?

A

Yes - if it includes provisions for property that were inconsistent with the law of survivorship

70
Q

How can difference of opinion (dispute) be settled where the Ts and Bs are different people and the land is owned as a commercial venture/investment?

A

Difference of opinion can be dealt with by discretion of Ts

71
Q

Who can apply to the court for an order to settle disputes involving co-owned land?

A

Anyone with an interest in the land e.g. Ts, Bs, mortgagees of the legal or equitable title, Ts in bankruptcy, people holding charging orders

72
Q

What can the court make orders for and not make orders for?

A
  • Can: order Ts to do something e.g. make order for sale, order as to who occupies, orders as to nature/exent of B’s interest
  • Cannot: order one B to ‘buy out’ another
73
Q

What factors must the court equally consider when reaching a decision on an application?

A
  1. Intentions of the person(s) (if any) who created the trust [does not relate to everyday co-ownership; relates to expressly created lifetime trusts]
  2. The purpose for which the property subject to the trust is held
  3. The welfare of any minor who occupies/might reasonably be expected to occupy any land subject to the trust as his home; and
  4. The interests of the secured creditor of any B
  5. The circumstances and wishes of any Bs of full age or (in case of dispute) of the majority

The s15 factors

NO FACTOR IS MORE IMPORTANT THAN THE OTHER

74
Q

When considering the purpose(s) for which the property subject to the trust is held, what happens if that purpose is still continuing?

A

It will weigh against an order for sale being made

75
Q

Where the purpose is for a family or matrimonial home, can an order for sale be made if one adult moves out?

I.e. is the purpose really still continuing?

A
  • For family home = even if one parent leaves, the purpose can continue if kids are being raised there
  • For matrimonial home (with no kids) = if one partner leaves, it can be ordered for sale as a joint purpose cannot be carried out unilaterally
76
Q

When considering the welfare of a minor, will all ages of children be considered equally?

A

No, more weight is attached to the welfare of an infant or a child than an older teenager who is independent/working

77
Q

Is greater weight given to the creditor when considering theirs and the Bs’ interests?

A

Interests of the creditor are just one factor to be considered and there is no presumption for or against a sale at the start, but case law has shown preference to creditors (especially where other factors not given much weight - see examples)

E.g. Bank or Ireland - bank was owed £300,000 and no payment made for nearly 8 years, without sale bank had no real prospect of recovering anything (parents were divorced and son was nearly 18)

Putnam - husband granted order for sale of jointly owned property where his debts became unmanagebale, but wife had enough equity in property to buy a smaller property outright

Fred Perry - sale ordered and commercial interests explicitly given preference, but postponed sale to give time for family to relocate

78
Q

When the court considers the wishes of any Bs of full age, what does it mean they will have regard to the majority?

A

The court shall have regard to the majority in respect of value of interest held

79
Q

How is overreaching related to an order for sale?

A

If court makes order for sale it will be an overreaching event; interest will be transferred into monies when land is sold

Land Law (9 decks)

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